09 November 2007

It's hard to see a silver lining if you're wearing rose-colored glasses.

In today's Science Journal column in the Wall Street Journal, Robert Lee Hotz writes about the biological predisposition toward optimism (subscription required):
Two research teams exploring the anatomy of expectations offer a new perspective on the power of a positive outlook. For the first time, scientists at New York University have mapped the upbeat brain -- finding in a cluster of neurons the size of a martini olive the seed of a sunny outlook on life. At its core, the brain is built for optimism, their work suggests.

Far from deforming our view of the future, this penchant for life's silver lining shapes our decisions about family, health, work and finances in surprisingly prudent ways, concluded economists at Duke University in a new study published in the Journal of Financial Economics. "Economists have focused on optimism as a miscalibration, as a distorted view of the future," said Duke finance scholar David T. Robinson. "A little bit of optimism is associated with a lot of positive economic choices."

. . . .

Optimists, the Duke finance scholars discovered, worked longer hours every week, expected to retire later in life, were less likely to smoke and, when they divorced, were more likely to remarry. They also saved more, had more of their wealth in liquid assets, invested more in individual stocks and paid credit-card bills more promptly.

Yet those who saw the future too brightly -- people who in the survey overestimated their own likely lifespan by 20 years or more -- behaved in just the opposite way, the researchers discovered.

Rather than save, they squandered. They postponed bill-paying. Instead of taking the long view, they barely looked past tomorrow. Statistically, they were more likely to be day traders. "Optimism is a little like red wine," said Duke finance professor and study co-author Manju Puri. "In moderation, it is good for you; but no one would suggest you drink two bottles a day."

The researchers found that this optimistic predisposition was common to all professions -- except one. Hmm . . . I wonder which profession might possibly turn out to be a haven for pessimists?
Surveying law students at the University of Virginia, [University of Pennsylvania researcher Dr. Martin Seligman] found that pessimists got better grades, were more likely to make law review and, upon graduation, received better job offers. There was no scientific reason. "In law," he said, "pessimism is considered prudence."

I prefer to think of our profession as inherently neither optimistic nor pessimistic; instead, we're by nature and training primarily problem-solvers. That's why they teach us in law school that regardless whether a glass is half-full or half-empty, if you drink the rest there'll be no arguments between the optimists and pessimists around you. Problem solved.

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